Shareholders Will Probably Not Have Any Issues With South32 Limited's (ASX:S32) CEO Compensation

Key Insights

• South32's Annual General Meeting to take place on 24th of October
• CEO Graham Kerr's total compensation includes salary of US$1.21m
• Total compensation is similar to the industry average
• South32's EPS declined by 55% over the past three years while total shareholder return over the past three years was 9.4%

Despite South32 Limited's (ASX:S32) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. The upcoming AGM on 24th of October may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for South32

How Does Total Compensation For Graham Kerr Compare With Other Companies In The Industry?

According to our data, South32 Limited has a market capitalization of AU$17b, and paid its CEO total annual compensation worth US$4.7m over the year to June 2024. That's a notable increase of 17% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.2m.

On comparing similar companies in the Australian Metals and Mining industry with market capitalizations above AU$12b, we found that the median total CEO compensation was US$4.3m. This suggests that South32 remunerates its CEO largely in line with the industry average. Furthermore, Graham Kerr directly owns AU$12m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	US$1.2m	US$1.1m	26%
Other	US$3.5m	US$2.9m	74%
Total Compensation	US$4.7m	US$4.0m	100%

On an industry level, roughly 65% of total compensation represents salary and 35% is other remuneration. In South32's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

South32 Limited's Growth

Over the last three years, South32 Limited has shrunk its earnings per share by 55% per year. It saw its revenue drop 2.9% over the last year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has South32 Limited Been A Good Investment?

With a total shareholder return of 9.4% over three years, South32 Limited has done okay by shareholders, but there's always room for improvement. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

To Conclude...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at South32.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.